Asia stocks rebound after Fed boosts economic view
Asian stock markets rebound after Fed signals waning US recession; Nikkei up 1 percent
By Jeremiah Marquez, AP Business Writer
On Thursday August 13, 2009, 12:48 am EDT
HONG KONG (AP) -- Asian stocks rebounded Thursday after the U.S. Federal Reserve said the world's largest economy appeared to be "leveling out" from its worst recession in decades.
Almost every major market was green after tumbling the day before ahead of the U.S. central bank's announcement, though Chinese shares extended their losses. Oil prices were steady above $70 a barrel and the dollar slid against the yen and the euro.
Japan's Nikkei 225 stock average rose 104.21 points, or 1 percent, to 10,539.21, while Hong Kong's Hang Seng jumped 400.43, or 2 percent, or 20,835.67. South Korea's Kospi was up 0.8 percent.
"We have more and more confirmation the U.S. recession is ending and investors are currently buying into this," said John Mar, co-head of sales trading, Daiwa Securities SMBC Co. in Hong Kong.
At the same time, Mar said there's some fear that the rally could hit a wall and reverse in the coming weeks. Flows of money into investment funds were getting choppy after months of steady growth and traders were increasingly placing bets the Standard & Poor's 500 index, up nearly 50 percent since March, will retreat next month.
Markets in Taiwan, Australia and Singapore gained a little under 2 percent apiece. Shanghai's index, though, fell 0.4 percent to 3,100.39 following a nearly 5 percent tumble the previous session.
Optimism about the U.S. economy took hold after the Fed, wrapping up its two-day policy meeting, issued a rosier assessment of the economy and said it would keep to its key interest rate near zero. In another sign of confidence in a U.S. revival, the central bank said it would dial back one of its main emergency lifelines to the economy -- a program to buy government securities as a way to keep rates on mortgages and other consumer debt lower.
The Fed's reassurance that an economic turnaround was at hand sent U.S. markets higher overnight.
The Dow rose 120.16, or 1.3 percent, to 9,361.61. The Standard & Poor's 500 index rose 11.46, or 1.2 percent, to 1,005.81, while the Nasdaq composite index gained 28.99, or 1.5 percent, to 1,998.72.
Oil prices climbed further in Asia trade, with benchmark crude for September delivery rising 60 cents to $70.76. The contract gained 71 cents overnight.
The dollar slipped to 95.92 yen from 96.08 yen, and the euro rose to $1.4224 from $1.4201.
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